HUD's $25.6M contract for loan sale services aimed to maximize recoveries and stabilize neighborhoods

Contract Overview

Contract Amount: $25,576,156 ($25.6M)

Contractor: Verdi Consulting Inc

Awarding Agency: Department of Housing and Urban Development

Start Date: 2014-09-30

End Date: 2020-08-29

Contract Duration: 2,160 days

Daily Burn Rate: $11.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD), UNDER THE AUSPICES OF THE FEDERAL HOUSING ADMINISTRATION S (FHA) SINGLE FAMILY LOAN SALE (SFLS) PROGRAM SELLS CERTAIN OF ITS SINGLE FAMILY DEFAULTED PORTFOLIO TO EXPEDITE THE DISPOSITION OF DEFAULTED ASSETS, MAXIMIZE THE RECOVERIES FROM SALES PROCEEDS TO THE FHA INSURANCE FUND, AND ADDRESS THE FHA S PUBLIC POLICY OBJECTIVES OF HOMEOWNERSHIP AND NEIGHBORHOOD STABILIZATION. THIS REQUIREMENT INCLUDES THE TASKS OF ASSEMBLING AND PRESENTING INFORMATION ABOUT THE ASSETS, MARKETING THE OFFERING OF ASSETS IN POOLS TO QUALIFIED INVESTORS, ADVERTISING, ACCEPTING THE BIDS ON SALE DAY AND ASSISTING WITH THE SETTLEMENT WITH THE WINNING PURCHASERS AND TRANSFER OF SERVICING OF THE ASSETS SOLD. IGF::OT::IGF

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Housing and Urban Development obligated $25.6 million to VERDI CONSULTING INC for work described as: THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD), UNDER THE AUSPICES OF THE FEDERAL HOUSING ADMINISTRATION S (FHA) SINGLE FAMILY LOAN SALE (SFLS) PROGRAM SELLS CERTAIN OF ITS SINGLE FAMILY DEFAULTED PORTFOLIO TO EXPEDITE THE DISPOSITION OF DEFAULTED ASSETS, MAXIMIZE THE RECO… Key points: 1. Contract supports FHA's Single Family Loan Sale program to dispose of defaulted assets. 2. Services include asset information assembly, marketing, bidding, and settlement assistance. 3. Focus on maximizing recoveries for the FHA Insurance Fund and public policy objectives. 4. Contract duration of 2160 days indicates a long-term, ongoing need for these services. 5. The firm fixed-price contract type suggests predictable costs for the government. 6. This contract is part of a broader effort to manage distressed mortgage portfolios.

Value Assessment

Rating: good

The contract value of $25.6 million over approximately 6 years appears reasonable for the scope of services provided. These services are critical for managing the FHA's defaulted loan portfolio, which can involve complex asset disposition and marketing efforts. Benchmarking against similar contracts for loan sale advisory services is challenging due to the specialized nature of FHA assets, but the pricing seems aligned with the administrative and management consulting services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This competitive process is expected to yield fair market pricing and ensure the government receives the best value. The presence of 7 bidders suggests a healthy level of interest and capability within the market for these specialized services.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces and ensuring that the most capable and cost-effective vendor is selected.

Public Impact

Homeowners in distressed situations may benefit from the stabilization of neighborhoods through the sale of defaulted properties. Qualified investors are provided with opportunities to purchase pools of single-family defaulted loans. The FHA Insurance Fund benefits from maximized recoveries on defaulted assets. The program contributes to broader housing market stability and homeownership goals. The services support the efficient management of federal housing programs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for extended contract periods to increase overall cost.
Complexity of managing defaulted assets could lead to unforeseen challenges.
Reliance on a single contractor for critical disposition services.

Positive Signals

Clear objectives for maximizing financial recoveries and public policy goals.
Full and open competition ensures market-driven pricing.
Firm fixed-price contract provides cost predictability.
Long contract duration allows for sustained program support.

Sector Analysis

This contract falls within the administrative management and general management consulting services sector, specifically tailored to the unique needs of federal housing finance. The market for such specialized services is driven by government agencies managing large portfolios of financial assets. Comparable spending benchmarks are difficult to establish precisely due to the niche nature of FHA loan sales, but the scale of this contract reflects the significant volume of defaulted assets managed by HUD.

Small Business Impact

The data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As it was awarded under full and open competition, the primary focus was on selecting the best overall offer, rather than prioritizing small business participation. Further analysis would be needed to determine if small businesses were involved as subcontractors.

Oversight & Accountability

Oversight for this contract would typically reside with the Department of Housing and Urban Development (HUD) contracting officers and program managers. The Inspector General's office at HUD would also have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is facilitated through contract award data and reporting requirements, though specific performance metrics are not detailed here.

Related Government Programs

Federal Housing Administration (FHA) Single Family Loan Sale Program
HUD Defaulted Asset Management
Mortgage-Backed Securities Programs
Government Loan Portfolio Management

Risk Flags

Contract duration exceeds typical short-term service agreements.
Specialized nature of services may limit contractor pool.
Potential for market fluctuations impacting asset recovery values.

Frequently Asked Questions

What is this federal contract paying for?

Department of Housing and Urban Development awarded $25.6 million to VERDI CONSULTING INC. THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD), UNDER THE AUSPICES OF THE FEDERAL HOUSING ADMINISTRATION S (FHA) SINGLE FAMILY LOAN SALE (SFLS) PROGRAM SELLS CERTAIN OF ITS SINGLE FAMILY DEFAULTED PORTFOLIO TO EXPEDITE THE DISPOSITION OF DEFAULTED ASSETS, MAXIMIZE THE RECOVERIES FROM SALES PROCEEDS TO THE FHA INSURANCE FUND, AND ADDRESS THE FHA S PUBLIC POLICY OBJECTIVES OF HOMEOWNERSHIP AND NEIGHBORHOOD STABILIZATION. THIS REQUIREMENT INCLUDES THE TASKS OF ASSEMBLING AND PRESENTING INFOR

Who is the contractor on this award?

The obligated recipient is VERDI CONSULTING INC.

Which agency awarded this contract?

Awarding agency: Department of Housing and Urban Development (Department of Housing and Urban Development).

What is the total obligated amount?

The obligated amount is $25.6 million.

What is the period of performance?

Start: 2014-09-30. End: 2020-08-29.

What is the historical spending pattern for similar loan sale services at HUD or FHA?

Historical spending on similar loan sale services at HUD/FHA can vary significantly based on market conditions and the volume of defaulted loans. While specific figures for prior contracts are not provided, the FHA's Single Family Loan Sale (SFLS) program has been active for many years. The $25.6 million awarded to VERDI CONSULTING INC for the period of 2014-2020 reflects a substantial investment in managing these assets. Past programs may have involved different contracting vehicles or service providers, but the consistent need for such services indicates a recurring expenditure category for HUD to manage its portfolio effectively and meet its public policy objectives.

How does the performance of VERDI CONSULTING INC on this contract compare to industry benchmarks?

Assessing VERDI CONSULTING INC's performance against industry benchmarks is challenging without specific performance metrics from the contract itself. However, the contract's objectives—maximizing recoveries and stabilizing neighborhoods—provide a framework for evaluation. Success would be measured by the efficiency of asset disposition, the amount of funds recovered for the FHA Insurance Fund, and the positive impact on community stabilization. Given the contract's duration and renewal (implied by the start and end dates), it suggests a level of satisfaction with their services. A deeper analysis would require access to performance reports, audit findings, and potentially comparisons with other firms handling similar portfolios.

What are the primary risks associated with managing defaulted FHA loans, and how does this contract mitigate them?

Primary risks in managing defaulted FHA loans include market volatility affecting property values, the cost of property maintenance and disposition, legal complexities in foreclosure and sale processes, and potential for fraud. This contract mitigates these risks by outsourcing the specialized tasks of asset assembly, marketing, and settlement to VERDI CONSULTING INC. Their expertise in navigating these processes, coupled with the FHA's oversight, aims to ensure efficient sales, maximize recovery values, and adhere to legal and regulatory requirements, thereby reducing the direct burden and risk on the government.

What is the estimated value or recovery rate achieved through this contract compared to the initial loan values?

The specific recovery rate or total value achieved through this contract is not detailed in the provided data. The contract's objective is to 'maximize the recoveries from sales proceeds to the FHA Insurance Fund.' The total award amount of $25.6 million covers the services rendered by VERDI CONSULTING INC over the contract period. The actual financial outcome for the FHA would be the difference between the total proceeds from the sale of defaulted assets and the costs incurred, including the contractor's fees. Without data on the portfolio's initial value and the final sale prices, a precise recovery rate cannot be calculated.

How has the volume of defaulted FHA loans changed over the life of this contract, and did it impact the contractor's workload?

The volume of defaulted FHA loans can fluctuate based on economic conditions, interest rates, and housing market stability. While the provided data doesn't detail these fluctuations during the 2014-2020 contract period, significant economic events like the aftermath of the 2008 financial crisis could have influenced the number of defaults. An increase in defaulted loans would likely increase the workload for VERDI CONSULTING INC in terms of asset preparation, marketing, and managing sales. Conversely, a decrease would reduce their workload. The contract's fixed duration suggests a planned scope, but adaptive management by HUD would be necessary to address volume changes.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: DU100H-14-R-0006

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 7799 LEESBURG PIKE, FALLS CHURCH, VA, 22043

Business Categories: 8(a) Program Participant, Black American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Economically Disadvantaged Women Owned Small Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $25,576,186

Exercised Options: $25,576,186

Current Obligation: $25,576,156

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS00F0016Y

IDV Type: FSS

Timeline